Is the carbon tax idea dead?

That is the topic of my latest Bloomberg column, here is one bit:

And one striking result from Tuesday’s election is that voters in Washington state, a Democratic stronghold, soundly rejected a proposed carbon tax by a margin of 56 to 44 percent. This raises the prospect that the carbon tax may be dead as a policy for the time being, including at the state level. As my Bloomberg Opinion colleague Liam Denning writes: “We can debate the magnitude of the vaunted blue wave, but there was definitely no green wave.”

Like many economists, I have long supported the idea of a carbon tax, and still do. Government has to tax something. So why not tax those activities which generate social costs, in this case through disruptive climate change? It is a very intuitive argument that has persuaded many economists on both sides of the political spectrum.

But a carbon tax is just not a popular idea with American voters, of either party. It is hard to argue that the Republican Party or the conservative movement has a stranglehold over the politics of Washington state.

Furthermore, this defeat isn’t just a one-off. 2009’s American Clean Energy and Security Act — a cap-and-trade bill in Congress similar to a carbon tax in its essentials though not all of its exact mechanisms — failed even when Democrats controlled Congress and the presidency. The momentum in Canada, typically considered more left-wing than the U.S., also is running against carbon taxes. In 2014, Australia voted to repeal its carbon-pricing law. Washington state itself rejected an earlier carbon-tax proposal, coupled with a cut in the state sales tax, in 2016.

The broader data are striking. According to a World Bank estimate, 23 countries have carbon taxes of some kind, while 176 have targets or support for renewable energy alternatives. It’s hard to avoid the conclusion that the carbon tax just isn’t a big political winner.

There is much more at the link.

Is biology now in charge?

From the great Laura Deming:

One of my biggest personal fears is working in the wrong field to achieve the goal I care about. If you were around pre-1900s, and wanted to contribute to biology, you should have been a physicist (Robert Hooke, a physicist discovers the first cell, making a better microscope is a major driver of progress). In which field should you work to maximize progress in biology today?

…But something interesting happened around the 1950s. If you look at the most important techniques in biology, in the second half of the 1900s, they’re all driven by tools discovered in biology itself. Biologists aren’t just finding new things – they’re making their new tools from biological reagents. PCR (everything that drives PCR, apart from the heater/cooler which is 1600s thermodynamics, is either itself DNA or something made by DNA), DNA sequencing (sequencing by synthesis – we use cameras/electrical detection/CMOS chips as the output, but the hijacking the way the cell makes DNA proteins remains at the heart of the technique), cloning (we cut up DNA with proteins made from DNA, stick the DNA into bacteria so living organisms can make more copies of it for us), gene editing (CRISPR is obviously made from DNA and with RNA attached), ELISA (need the ability to detect fluorescence – optics – and process the signal, but antibodies lie at the heart of this principle), affinity chromatography (liquid chromatography arguably uses physical principles like steric hindrance, or charge, but those can be traced back to the 1800s – antibodies and cloning have revolutionized this technique), FACS uses the same charge principles that western blots do, but with the addition of antibodies…

Something special happens when a field becomes self-reinforcing. Previously, biology looked to physics and other disciplines for tools to break open new frontiers. But, empirically, since the 1950s, that has all changed.We don’t make mutant mice with x-rays and microscopes – we figure out the gene we want to go after, and we use high-precision biological tools to change it. Computer science has certainly played an important role in processing all of the information now streaming out of biological systems, but the major advances – the core things driving progress in biology forward – have come from biology itself. Biology is eating physics (and, some would jokingly suggest, based on the outperforming endurance of DNA compared to any modern hardware and plausibility of biological computation, possibly computation itself).

Naively, if we can expect n new discoveries / t tools we have, if the tools are static, maybe that’s a fixed number of discoveries per year. But if t tools increases, then we get more discoveries. What if it increases as a function of n?

This is important because it’s a self-reinforcing loop. The more things in biology we discover today, the faster we can discover things tomorrow. Biologists are the new engineers. But their tools look a lot different than any we’ve seen before. Sequencing is the microscope of tomorrow. And sequencing was built by biological tools.

The entire (short) essay is of interest.  Here is more on Laura Deming.

Depression and religion in adolescence

Depression is the leading cause of illness and disability in adolescence. Many studies show a correlation between religiosity and mental health, yet the question remains whether the relationship is causal. We exploit within-school variation in adolescents’ peers to deal with selection into religiosity. We find robust effects of religiosity on depression that are stronger for the most depressed. These effects are not driven by the school social context; depression spreads among close friends rather than through broader peer groups that affect religiosity. Exploration of mechanisms suggests that religiosity buffers against stressors in ways that school activities and friendships do not.

That is the abstract of a new paper by Jane Cooley Fruehwirth, Sriya Iyer, and Anwen Zhang, forthcoming in the JPE.  I find this to be one of the most underemphasized benefits of religion, perhaps because religious people themselves do not wish to come off as overly neurotic.  And the effect seems to be large:

…a one standard deviation increase in religiosity decreases the probability of being depressed by 11 percent.  By comparison, increasing mother’s education from no high school degree to a high school degree or more only decreases the probability of being depressed by about 5 percent.

And for the most depressed individuals, religiosity seems to be more effective than cognitive-based therapy “one of the most recommended forms of treatment.”

Acquisition Talk: A daily blog on the theory and practice of weapons system acquisition

That is a new blog by Eric Lofgren, an Emergent Ventures recipient.  Here is an excerpt from one post:

The story was from 1938. It sounds astounding to modern ears. Congress did not earmark money for special projects. Pitcairn was a bit of a political entrepreneur by convincing his representative to get a project funded that funneled money back to his own district.

Back then, the Army and Navy were funded according to organization and object. Project earmarking only started becoming routine with the implementation of the program budget in 1949 (and really not until the rise of the PPBS in 1961).

I often say that the budget should be the most important aspect of defense reform, not the acquisition or requirements processes.

By the way, the French parliament doesn’t earmark defense funding. There’s actually quite a bit to learn from the French experience.

Here is his post on cost disease in weapons acquisition, and more on that here: “It’s clear that defense acquisition costs are growing at least as fast, and probably much faster, than education and healthcare costs. Defense platform unit costs grow nominally from 7-11% per year. Doing some adjustments, DOD production costs probably grow twice the rate of inflation.”

Here is his general post on acquisition reform and the limits of decentralization, maybe the best introduction to his overall point of view.

Forecasting tournaments, epistemic humility and attitude depolarization

People often express political opinions in starkly dichotomous terms, such as “Trump will either trigger a ruinous trade war or save U.S. factory workers from disaster.” This mode of communication promotes polarization into ideological in-groups and out-groups. We explore the power of an emerging methodology, forecasting tournaments, to encourage clashing factions to do something odd: to translate their beliefs into nuanced probability judgments and track accuracy over time and questions. In theory, tournaments advance the goals of “deliberative democracy” by incentivizing people to be flexible belief updaters whose views converge in response to facts, thus depolarizing unnecessarily polarized debates. We examine the hypothesis that, in the process of thinking critically about their beliefs, tournament participants become more moderate in their own political attitudes and those they attribute to the other side. We view tournaments as belonging to a broader class of psychological inductions that increase epistemic humility and that include asking people to explore alternative perspectives, probing the depth of their cause-effect understanding and holding them accountable to audiences with difficult-to-guess views.

That is a new paper from Barbara Mellers, Philip Tetlock, and Hal R. Arkes, via the excellent Kevin Lewis and Michelle Dawson.  One very general implication is that there are mental, writing, and practical exercises that really can improve your habits of thought.

My Conversation with Eric Schmidt

Self-recommending, here is the audio and video.  Here is the video, here is one excerpt from the dialogue:

COWEN: So you receive an offer to run Google. Why were you so skeptical about Google at first?

SCHMIDT: Well, I assumed that search wasn’t very important, and I assumed the ads didn’t work. I was so concerned about the ads that, after I accepted the offer — because it just seemed like it was interesting, and a lot of luck comes from doing things that are interesting, and sort of creating your own luck — I hauled the then–sales executive, whose name was Tim Armstrong, who you all know well, and I said, “Tim, prove to me that these ads work.”

So they showed me a set of ads, and they looked pretty foolish to me. So I said, “Well, let’s go find the finance person,” of which there was one, and the accounting system was done on QuickBooks. I said, “Prove to me that people are paying for these ads,” and they did.

We then did an ads conversion in the first year, which was called Project Drano, where we basically took three different ads databases, which were simple compared to today’s databases, and merged them into one. And I was terrified, absolutely terrified that the ruse that we had — because we had fixed pricing on our ads — that people would discover that our ads were not worth anything.

So I organized what I called the cash restriction period, where the only thing you could do if you wanted to spend money, is you could only spend money on Friday at 10 AM, and you had to come to me to justify it, which very much shuts down spending.

So we get to this conversion, we turn the thing over, and of course, we didn’t bother to build into the tools. We had no metrics. We didn’t know what was going on. I’m going, “Oh my God, the company is bankrupt. My first year, I’ve done a terrible job. What will the board think?” I did my best to notify everybody we were going to go kaput.

The auction produced a price that was three times higher than the previous prices. Very interesting. So much for the cash restriction period, and the rest is history.

And from Eric:

We did all sorts of things. My favorite example is that we would interview people to death. We interviewed this one gentleman sixteen times, and we couldn’t decide. So I picked a random number, which was half, and I said, “We should have a max of eight, and if we can’t decide after eight . . .” We’ve since done a statistical analysis, and the answer today is four to five interviews.

And here is my bit on Eric:

COWEN: Now early on, you were an intern at Bell Labs, and also PARC, which belonged to Xerox, and I think of those two institutions as stemming from earlier glory years of American science.

Is it fair to think of your career as in some sense, you’re the person who spans those two eras, the Bell Labs-PARC era of doing things, and then the tech era of manipulating information, and that your ability to bring expertise from those two areas together is what has made you a unique figure? Is that a fair assessment of how you fit into the picture?

And there is this bit:

COWEN: How did it influence you having a father who was a famous economist? He wrote on balance of payments crises. What did you draw from him? Did that have a role in using so much economics in Google?

SCHMIDT: Well, what’s interesting is, I asked my father, “If you’re such a good economist, why are we not rich?”

I very much enjoyed doing this event, which was for Village Global, a new venture capital firm.  Here is a Village Global post on lessons from the event.

The elections

From Matt Yglesias on Twitter:

Very normal Democrats won all kinds of House races without reviving “blue dog” antics but also a bunch of reality checks for the capital-l Left in these results.

Not just a couple of House races where insurgent candidates fizzled, but the California rent control initiative the Washington “green new deal” initiative and the MD-Gov race all show limited appetite for ambitious left policy in even blue states.

Conversely, the more modest economic progressive agenda of Medicaid expansion and minimum wage increases continues to triumph even in very conservative states.

From Angus:

“over the past 21 midterm elections, the President’s party has lost an average 30 seats in the House, and an average 4 seats in the Senate” NY Times sez it’s R – 26 in House and + 2-5 in Senate. Yet they call it “A rebuke to Trump”. That’s kind of just wishful thinking.

Somehow — miraculously — democracy did not die, I am still writing blog posts for tomorrow morning, fascism has yet to arrive, and life goes on!

p.s. the youth vote was not up much.  And at least one Kremlin mole has been ousted.

China sentences of the day

With the Internet, too much information leaks out about the failings of governments. Thus, they are unable to “rule by persuasion” and are increasingly reduced to relying on sheer force. As a provocative example, Gurri believes that the Chinese government now is more dependent on force than it would be without the Internet.

That is from Arnold Kling reviewing Martin Gurri’s forthcoming The Revolt of the Public and the Crisis of Authority in the New Millennium.

Emergent Ventures grant recipients, the first cohort

Here is the first round of winners of the new Emergent Ventures initiative at Mercatus, led by me.  The list is ordered roughly in the order grants were made, and reflects no other prioritization.  All project descriptions are mine alone and should not be considered literal attributions of intent to the project applicants.  Here goes:

Anonymous grant for writing in Eastern Europe.

Pledged grant to San Francisco’s Topos House, conditional on finding a “social science prodigy” to live in the house for a while and interact with the other Topos fellows.  Topos is a San Francisco house where several tech prodigies live and periodically seminars and larger group interactions are held there or connected to the house.

Travel grant made to 18-year-old economics prodigy, to travel to San Francisco to meet with members of the “rationality community.”  The hope is to boost her career trajectory.

Grant to support the work of Mark Lutter and his Center for Innovative Governance Research, on charter cities and also an attempt to create a new charter city.

Grant to Harshita Aurora to help her pursue work in brain science, including brain-computer interfaces to help disabled people manipulate and move objects.  Harshita is a 17-year-old Indian prodigy, who first received attention for her programming work in the app space.  Harshita made her bio and proposal public:

Leonard Bogdonoff has a project to scrape Instagram and create a searchable concordance of street art around the world.  His website is here and his blog is  One use of this project is to amplify the voice of “protest art” against the constraints of censorship from autocratic governments, but it is also a new way to glean usable information from Instagram.

Travel and conference grant to Juan Pablo Villarino, from Argentina, sometimes called “the world’s greatest hitchhiker.”

Ben Southwood, public intellectual from England, support for his writing and research on why progress in science has slowed down.

Eric Lofgren has worked at the Pentagon for seven years and now will spend a year at Mercatus/George Mason to develop the skills, including blogging and podcasting, to become the nation’s leading public intellectual on defense procurement.

A two-year pledge to Gaurav Venkataraman, at University College of London, to support his doctoral work on the idea of RNA-based memory.  This research also has exciting implications for the design of artificial intelligence.

Joy Buchanan, economist, a grant to conduct research on why people become entrepreneurs and initiate start-ups, using the methods of experimental economics.

Michael Sonnenschein, Masters student at MIT in development economics (and a television screenwriter) a grant for research to reform and improve the Haitian lottery system, and turn it into a means to combat poverty.

Stefan Roots is writing and editing an on-line and also paper newspaper to cover local news in Chester, Pennsylvania, aimed at the African-American community.

Jeffrey Clemens, professor at UC San Diego, a grant to help him develop his on-line writing in economics.

Kelly Smith has a project to further extend and organize a parent-run charter school system in Arizona, Prenda, using Uber-like coordinating apps and “minimalist” educational methods.

David Perell, to encourage and support his work in podcasting and social media.

We are in the midst of processing several other awards as well, so do not worry if you are not yet mentioned.

I am delighted to welcome this very prestigious and accomplished “entering class” of Emergent Ventures fellows.  If you are considering applying, please note that we are interested in other topics and methods as well.

Will a low price actually prove good for crypto?

That is the topic of my latest Bloomberg column, here is one bit:

Now the time has come for crypto to go on a diet. No more easy money. No more thoughts about ICOs leading to quick riches. The rhetoric is shifting toward a more cautious or even apologetic tone. The corresponding reality can perhaps be one of greater focus and relevance.

We’re at the point where crypto finally has to prove its social worth. But what might that mean? Imagine using crypto as a medium of micropayments to pay for media on the internet. Or perhaps you’ll use the blockchain to verify your identity, rather than telling some stranger on the phone the last four digits of your Social Security number. Or how about a system for self-executing, zero-cost contracts? (For example: I will give $10,000 to a charity if 10 other people do.) Maybe the burgeoning field of virtual reality will rely on crypto to support some of its transactions, starting with virtual sex, which the major banks might stay away from. Alternatively, I might use crypto assets to send money to Mexico, avoiding the steep charges from current money transfer systems. In the more utopian visions, crypto leads to the rise of entirely self-governing systems, powered by the blockchain.

And this:

By the way, if you are confused by the terms “proof of stake” and “sharding” (and others), that is probably a good thing. As the tech guru Stewart Brand is reported to have said, the proliferation of terminology in crypto is a sign that new ideas and possibly important new technologies are afoot.

Stay tuned…

Tuesday assorted links

What should I ask Rebecca Kukla?

I will be doing a Conversation with her, here is her home page:

Professor of Philosophy and Senior Research Scholar in the Kennedy Institute of Ethics at Georgetown University

Also: amateur powerlifter and boxer and certified sommelier

I live in the middle of Washington, DC, with my 13-year-old son Eli and my two Portal-themed cats, Chell and Cube. My research focuses on social epistemology, philosophy of medicine, and philosophy of language. 

This interview is an excellent entry point into her thought and life, here is an excerpt from the introduction:

[Rebecca] talks about traveling the world with her nomadic parents, her father who was a holocaust survivor and philosopher, hearing the Dream argument in lieu of bedtime stories, chaotic exposure to religion, getting a job at and apartment at the age of 14, the queerness of Toronto, meeting John Waters and Cronenberg, her brother who is the world’s first openly transgender ordained rabbi, getting into ballet, combating an eating disorder, the importance of chosen family, co-authoring an article with her dad, developing an interest in philosophy of mathematics, the affordability of college in Canada, taking care of a disabled, dramatically uninsured loved one, going to University of Pitt for grad school, dealing with aggravated depression, working with Brandom, McDowell, the continental/analytic distinction, history of philosophy, how feminism and women—such as Tamara Horowitz, Annette Baier, and Jennifer Whiting–were treated at Pitt, coping with harassment from a member of the department, impostor syndrome, Dan Dennett and ‘freeedom’, her sweet first gig (in Vermont), dining with Bernie Sanders, spending a bad couple of years in Oregon, having a child, September 11th, securing tenure and becoming discontent at Carleton University, toying with the idea of becoming a wine importer, taking a sabbatical at Georgetown University which rekindled her love of philosophy, working on the pragmatics of language with Mark Lance, Mass Hysteria and the culture of pregnancy, how parenting informs her philosophy, moving to South Florida and the quirkiness of Tampa, getting an MA in Geography, science, philosophy and urban spaces, boxing, starting a group for people pursuing non-monogamous relationships, developing a course on Bojack Horseman, her current beau, Die Antwoord, Kendrick, Trump, and what she would do if she were queen of the world…

And from the interview itself:

I suspect that I’m basically unmentorable. I am self-destructively independent and stubborn, and deeply resentful of any attempt to control or patronize me, even when that’s not really a fair assessment of what is going on.

So what should I ask her?

How much do the experts wish to discount the future by?

…we find that expert opinion is particularly varied on the rate of time preference.  The modal value is zero, in line with many prominent opinions.  But with a median (mean) of 0.5 percent (1.1 percent)…


…while we find that experts recommend placing greater weight on normative than positive issues when determining the SDR, most believe that the SDR should be informed by both.

That is from the latest issue of American Economic Journal: Economic Policy, “Discounting Disentangled” by Drupp, Freeman, Groom, and Nesje.  You will of course find a lengthy discussion of these issues in my own Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals.